Like many global IT business process outsourcing companies, Cognizant has
focused its growth strategy on acquisitions.
During the past four years, Teaneck, New Jersey-based Cognizant, which has
58,000 employees in 40 locations globally, has averaged one acquisition per
year.
To maintain that pace, it’s essential to Cognizant that deals go through
quickly and smoothly. That’s why Cognizant’s corporate development team has
traditionally involved HR before, during and after the transaction, says Jim
Lennox, assistant vice president of North American human resources at
Cognizant.
But last year, Cognizant’s executives decided that just having HR involved
with acquisitions wasn’t enough. They needed a person within HR dedicated to
support all M&A activity for the company.
“Our corporate development team realized that having one HR person dedicated
to M&A would be great because that person had been through the process
before and understood it,” says HR manager Harsha Jalihal, who was chosen for
the position. “Also, working with one person is much easier.”
Cognizant is among a growing number of companies assigning HR executives to
M&A activity, says Len Gray, head of merger and acquisition consulting at
Mercer. While companies have increasingly understood the importance HR plays
during mergers and acquisitions, they also realize assigning an HR executive
helps them stay ahead of human capital issues that can arise, he says.
“This is a direct recognition of how important HR is to a deal being
successful,” Gray says. From merging cultures to retaining key talent to
realigning benefits plans, many companies have faced the challenges, he
says.
In a recent Mercer study, “M&A Beyond Borders: Opportunities and Risks,”
companies across the globe cited organizational cultural issues and human
capital integration as the two most significant challenges they faced in
previous transactions.
In her new role, Jalihal says she is involved with a potential acquisition
from the initial due diligence phase all the way through to helping with change
management issues once the deal is done.
As the HR point person, she helps collect and analyze information on the
potential target company, including talent, compensation, benefits and
performance management as well as its culture and organizational design, she
says.
Jalihal also plays a key role in integration planning, which involves
deciding which employees will join Cognizant, as well as reviewing employment
contracts and benefit plans.
After the deal is complete, Jalihal is still busy assisting with employee
communications, workforce reductions and employee engagement, she says.
While her new role requires project management skills and the ability to
think strategically, Jalihal believes it’s a position any good HR generalist
could take on.
“The best experience for this position is the hands-on learning,” she says.
“But you do need to understand HR.”
Having an HR background is important, particularly with details like benefits
rollovers, Lennox says. “It can get quite technical,” he says.
Another benefit of having an HR point person is that Cognizant can stay ahead
of the pitfalls that occur during takeovers, he says.
“That was kind of serendipitous,” he says. “It was a byproduct we didn’t
expect.”
—Jessica Marquez